The Right Royalty

Feature Article | October 4, 2005 by admin

C.H. Beck

C.H. Beck

In a market that sees thousands of new publications every year, book publishers face the challenge of efficiently managing and keeping tabs on costs beginning from the very inception of a product concept and extending over the entire course of the project. The competitive nature of the market demands that the book projects are kept short and production costs kept low. To this end, a future-proof IT structure is the best possible way of ensuring optimum system integration.
“Beck’s strategy features a title as the central object, around which it creates an integrated system of SAP components, such as royalty accounting, contract management, purchasing, campaign management, advertising effectiveness control and warehouse management. This allows key publishing processes to be mapped quickly, efficiently and flexibly and ensures seamless integration of the existing financial accounting system platform and third-party systems.” says Dr. Christian Andres, CIO at C.H. Beck.

Author appreciation pays

The performance of the publishing house hinges on its relationship with its authors – the people who help achieve its success. Correct accounting of royalties is vital to ensure the partnership remains strong and productive. C.H. Beck uses royalty accounting to perform approximately 20,000 royalty calculations each year. Things become rather more difficult when it comes to complex works involving more than 50 authors and publishers and a huge range of different royalty contracts, for example, scaled royalties, lump-sum payments, advance payments or milestone payments. The specific requirements of new commercial ventures, such as providing online access to Beck’s works or allowing customers to use databases for a fee, and increasing business volumes pose an additional challenge in terms of calculating content and productivity.
To ensure royalties are correctly accounted for, mass data from sales, such as the number of copies sold or clicks on the website, must be used along with the terms of contract and specific tax requirements for each author. Quality and service are other important elements that can ensure author loyalty to the publisher. These can be achieved, for example, by ensuring authors receive timely information when they need it or by providing them with personalized statements.

Improving service, quality and cost-effectiveness

When competition is particularly fierce and costs are rising, it is also very important to ensure prompt, title-specific controlling of cost-effectiveness and the level of royalty costs. Royalty accounting must therefore be seamlessly integrated into the publishing house’s business accounting and management systems.
In implementing the SAP solution, the publishing house wanted to be able to fulfil the increased requirements arising from complex works or new sales channels. Beck also wanted to increase and, as far as possible, automate its IT functions to lower costs appreciably, particularly in the areas of royalty accounting and contract and license management. For calculating royalties, Beck wanted to put in place a simple, clear accounting procedure that could also handle complex works and its online database service while providing authors with additional service options and enabling enhanced analyses and simulated calculations and controlling. The objective for contract management was to support and increase contract standardization. Creation and monitoring workflows were also to be improved and, where possible, automated. Beck also hoped to set up a service point where editors could find all the information necessary to facilitate their task of looking after authors. For example, information about the status of royalty payments, advance payments posted, or authors’ income tax calculations. In license management, the aim was to ensure simplified tracking and controlling of contracts and of licenses purchased, and to allow incoming payments to be monitored.

Setting up new systems and processes

From the outset, C.H. Beck was aware that its diverse range of requirements could not be met by changing systems alone. Instead, systems, workflows and organizational processes would have to be checked and, where necessary, restructured in line with the goals drawn up. To this end, the processes for the royalty accounting and contract and license management functions were mapped, remodeled on the ARIS process optimization platform from SAP Business Partner IDS Scheer, and then analyzed with ARIS to see how they could be optimized on an organizational and system-specific level. Through discussions and close cooperation, the specialist department, consultants from IDS Scheer and the IT department used the analysis results to develop target processes for SAP IPM , work out the organizational processes involved and model them with ARIS.
The project team automatically transferred the processes stored in ARIS to the SAP Solution Manager that was then used to configure SAP IPM with author management and royalty accounting functions for license purchasing contracts. After a mere four months the prototype for the new solution was in place and three months later the pilot stage was launched. The solution is due to go live at the start of fiscal year 2006. As well as the SAP IPM functions, the SAP Solution Manager used with ARIS was the deciding factor in the decision to begin the implementation phase. The business scenario Intellectual Property Management shipped with the SAP Solution Manager ensured simplified and accelerated implementation. ARIS can be used to change individual processes quickly and effectively, and virtually automatically, without any media break. This allows the IT solution to be tailored to the new processes with optimum results and reduces the implementation effort. As all changes are documented, the transparency of and control over system development, adjustment and usage also increase.

Total Cost of Ownership (TCO)

The project has been a huge success, ensuring a reduced TCO, less need for consultants, shortened accounting processes, better automated royalty accounting, particularly for online royalties, simplified accounting procedures, improved author services, increased transparency, simplified checks and improved integration with business accounting. A win-win situation as far as Dr. Andres is concerned: “The royalty accounting system we now have in place allows us to respond more quickly and flexibly to future developments, for example, in the area of legal requirements management, or for online products. This solution benefits not only us but also our authors and customers.”

Dirk  Beenken

Dirk Beenken

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